Dunzo, the fast-paced commerce company, is facing a severe financial crisis that has resulted in a delay in paying salaries to its senior employees. On July 19, the company informed its senior employees that the remaining portion of their June salary, originally due in June, will be postponed until September 4. This represents a significant delay from the previous deadline of July 20.
The financial crisis has already led to the deferral of June salaries for approximately 500 employees, which accounts for 50 percent of Dunzo’s entire workforce. Initially, the company had promised to clear all dues by July 20. However, ongoing discussions with investors to secure additional funding and address cash flow challenges have led to the postponement of the payment.
To further improve its financial situation, Dunzo has imposed a cap on employee salaries, limiting them to Rs 75,000 per month, regardless of their previous pay package.
In an email sent to the affected employees, Dunzo’s payroll team expressed regret for the delay and explained that the pending June salaries would now be paid on September 4, 2023. Additionally, the July salaries for all team members would also be disbursed on the same date, along with the August salary.
The company recognizes the difficulty this situation poses for its employees and has requested their patience and support. Dunzo emphasizes the importance of focusing on streamlining cash flow to establish a more sustainable business for the future.
However, these recent developments might lead to more job cuts and voluntary exits at the Bengaluru-based startup. Earlier this year, Dunzo had already terminated around 380 employees in two rounds of layoffs.
Despite raising $75 million in April, Dunzo continues to experience a high cash burn rate, leading to the holdback of salaries. In an effort to reduce costs, the company has attempted to shift its business model, focusing on sourcing products through a marketplace model instead of relying solely on its network of dark stores. This has led to the closure of at least 50 percent of its dark stores and the exit from other unprofitable markets while strengthening its hyperlocal delivery vertical.
Since its inception in 2015, Dunzo has raised close to $500 million from various investors, with Reliance holding the largest stake at 25.8 percent, and Google being the second-largest shareholder with approximately 19 percent ownership, according to Tracxn data. The company is now navigating a challenging financial landscape and is actively seeking ways to secure its future stability.
